How do you maintain a strong bottom line? Keep your profits. C: 029193-001.
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Transcript of How do you maintain a strong bottom line? Keep your profits. C: 029193-001.
How do you maintain a strong bottom line?Keep your profits.
C: 029193-001
Protecting your business and your employees is your number one priority and when it comes to dealing with the problem of disability, you have a number of choices:
Hope that it doesn’t happen to you or one of your employees,
Wait until a disability actually happens and then decide what to do, or
Establish a Qualified Sick Pay Plan that clearly explains the company’s procedures for absences due to injury or illness
If you hope it doesn’t happen to you or one of your employees….
You have a one-in-three chance of suffering a long- term disability before retirement if you are between the ages of 25 and 50*
It’s not a matter of if it happens, it’s when* 1985 Commissioner’s Disability Table A
Waiting until it happens and then handle it…..
I won’t offer anything to my employees
How will this impact company morale? Have I properly educated my employees so they can
address this on their own?
I don’t need a formal plan; I’ll just pay my key employees when it happens...
Deciding to continue one employee’s salary while disabled establishes a legal practice and sets a precedent for all employees
The “wages” paid are not considered a business expense so are not tax-deductible, nor are the FICA taxes tax-deductible
Financial Accounting Standard 112– expected payments must be booked as a business liability and the company must reserve for that liability
How long can you continue to pay? Who will make the determination of who is actually sick or hurt enough to warrant benefits?
Establish a Qualified Sick Pay Plan
Helps assure your business contributions will receive favorable tax treatment
Gives you, the business owner, control over participants, level of benefits, and cost to the business
Funded through disability income insurance, benefits are securely funded and claim determination is handled by the insurance company
For 3 or more insured individuals, a premium discount is available
What is a Qualified Sick Pay Plan?
A legal agreement that sets company policy before a disability occurs
It establishes:who to payhow much to paywhen to start paymentshow long to paywho will make the payments
What’s required to establish a Qualified Sick Pay Plan?
There are 5 basic requirements:
1. It must be in place prior to a disability
2. Its existence should be supported by written evidence
3. It should be communicated to covered employees
4. It must show a commitment to certain rules and regulations governing benefits
5. It must be a plan for employees
There is no need to file this agreement with the IRS
Fund the Qualified Sick Pay Plan through Massachusetts Mutual Life Insurance Company (MassMutual)
For many companies, disability income insurance is the preferred funding vehicle for wage
continuation plans
Why?
The burden of providing income during disability falls on MassMutual through its policy – you don’t have to take it from your business income or build a fund for it
And
Insuring through MassMutual means the insurance company assumes the responsibility for determining claims – you don’t have to decide what constitutes a disability
And that’s not all...
It will improve employee morale It helps Strengthens your company’s credit position as
it reflects good business management Policy premiums are discounted if 3 or more
individuals are insured Flexible funding arrangements to meet your needs– it
can be set up as employer-pay-all, employer-pay-part or employee-pay-all
Can be offered as an incentive to key employees
MassMutual has the solution
MassMutual offers two disability income insurance products to fund your Qualified Sick Pay Plan:Radius®, top-of-the-line protection providing
comprehensive coverageFlexElect® , quality coverage at an affordable cost
both are non-cancelable, guaranteed renewableboth are offered from MassMutual a Fortune 100
company* that has a long history of exceptional financial strengths
* Fortune magazine, April 2004
These policies have exclusions and limitations. As a MassMutual representative, I can provide
you with complete details and costs.
These policies are issued by Massachusetts Mutual Life Insurance Company
1292 State Street, Springfield MA 01111
15
The information contained in this presentation is being provided with the understanding that it is not intended to be interpreted as specific legal or tax
advice. Neither MassMutual nor any of its employees or representatives are authorized to give legal or tax advice. Individuals are advised to seek
the guidance of their own personal legal or tax counsel.